Insurance industry expanding further
Sep 9th, 2007 by Takaful
Source: The Star, 8th September 2007
The insurance industry further expanded in tandem with the favourable economic performance.
Combined premium income for the insurance industry increased 9.8% to RM13bil in the first half of the year (Jan-June 2006: 2.4%; RM11.8bil).
Combined assets grew 14.2% to RM116.3bil in the first half in line with the growth of new business.
Asset allocation remained concentrated on corporate and debt securities as well as Government securities, accounting for 64.6% of total assets.
The life insurance sector recorded strong growth, with the turnaround of new business premiums at 19.1% to RM3.8bil (Jan-June 2006: -11.4%; RM3.2bil), driven mainly by the increase in sales of investment and savings plans.
In terms of distribution channels, bancassurance tie-ups generated a higher share of 50.1% of new premiums in the first half (Jan-June 2006: 44.5%), while the market share of agency business declined to 43.7% (Jan-June 2006: 49.4%).
Market penetration of life insurance, as measured in terms of the total number of policies in force to total population, grew to 39.3% as at end-June (end-June 2006: 38.7%).
In the general insurance sector, continued moderation in the sales of motor vehicles dampened growth in motor premium income.
Gross motor premiums contracted 1.9% to RM2.1bil in the first half (Jan-June 2006: 0.8%; RM2.2bil).
However, robust growth in the offshore oil-related sector boosted the expansion in marine, aviation and transit insurance premiums, enabling the industry to cushion the decline in motor business.
The takaful industry grew strongly, with combined takaful contribution income increasing 36.2% to RM1.2bil, accounting for 8.1% of the total premiums of the insurance industry as at end-June.
In the family takaful sector, new business contributions expanded 198.8% to RM1.07bil (Jan-June 2006: -8.6%; RM358 million).
Market penetration increased to 6.8% as at end-June (end-2006: 6.6%). In the general takaful sector, motor business remained dominant, with a growth of 44.2% to RM191.8mil (Jan-June 2006: 44.2%; RM133mil).
Takaful assets increased 17.1% to RM7.6bil as at end-June and accounted for 6.2% of the total assets of the insurance industry.
Total loans outstanding of DFIs grew 8.1% to RM59.9bil as at end-June (end-2006: RM55.4bil). The increase in lending was mainly on account of higher financing for consumption credit, purchase of residential properties and the maritime and infrastructure sectors.
Consumption credit extended by Bank Rakyat and Bank Simpanan Nasional rose 11.8% to RM19.5bil as at end-June due to strong consumer demand.
Loans to the maritime and infrastructure sectors extended by Bank Pembangunan Malaysia increased to RM1.5bil and RM15.6bil respectively, mainly to finance the shipbuilding industry and utilities sector.
Lending to the agriculture sector increased 3.1% to RM3.7bil as at end-June, reflecting higher financing by Bank Pertanian Malaysia for agricultural activity such as livestock, agro-based processing, fisheries and production of fertilisers and biodiesel.
Financing for small and medium-scale enterprises (SMEs) increased further to RM14.7bil, accounting for 24.5% of total loans outstanding of the DFIs.